America’s Craft Brewers Pondering the Future

Two weeks ago America’s craft brewers gathered under one roof for the Brewers’ Association, their trade association’s, annual confab. Attendance crested 3,000 while exhibitors packed the hall. And the buzz was all about the nature of the future for this vulnerable industry segment. The industry still posted growth, but less so than past years.

The presentations that opened the conference were rife with passion, integrity, audacity, community, brotherhood. These are not words often associated with the beer industry as a whole but rule the craft community. Trade association lawyers squirmed as speaker after speaker talked about collaboration among the small brewers. These people have more in common with an extended family than a bunch of competitive businesses.

Still it is a business and one of the consistent refrains from the young industry was the limits of capacity. So many breweries simply couldn’t make any more beer. They’d hit their equipment wall. Furthermore, with the freeze on credit, financing expansion was off the table.

However, there was very little hand wringing over this seeming paralysis. Because as speaker after speaker intoned, the key to the category is in the glass. In fact, many, like Benj Steinman, are predicting, in the face of the proliferation of such flavorful beers, the permanent implosion of the the expensive imported light lager.

The cache of the import is giving way to flavor price value. Consumers just can’t justify spending the same amount on a light lager as they are on an imperial IPA. One just has so much more taste to then the other, which may explain the first year of no growth for imported beers. Still there are powerful imported brands with a lot of romance, heritage and mystique to them. They aren’t going away.

I did have to think if all of this could suggests an important shift in the shelf space set! I thought one of the most enlightening legacies of Beer Wars was the introduction of shelf space set and category captains into common parlance for beer drinkers. This was the must discussed subject in the lobby at the end of the film. Could some of these major brands with declining numbers leave some shelf space for craft beers?

Here’s another tidbit for enquiring minds; the plethora of wholesalers at the craftbrewers conference. They were there to find the latest trends in the industry, look for new emerging brands and learn how to hand sell beer. Any wholesaler who didn’t get all three was spending too much time at bars and not at the conference. In days of yore, small brewers decried the limits on market access imposed by an intransigent wholesaler network. Now the network is flying open, although there are still numerous closed markets and wholesalers with too many brands to handle well.

A subtext that continued to ripple through the conference was the ubiquitous presence of the domestic specialty brands, derisively called faux craft by the more vituperative members of the audience. These are craft type beers originating from major breweries. Blue Moon comes to mind. These beers, some are quite good actually, beg the fundamental question of the world of craft brewers and craft beer. If it’s really all about what’s in the glass, what’s the problem here. However, if it’s all about the crushing logic of capitalism, a preemptive strike by filling wholesalers’ warehouse and vital shelf space with another brand from a major brewery instead of a local craft, well then that’s an ale of a different hop.

So, my dear readers, start lining the pieces up and tell me what the future holds. Wholesalers opening up but maybe overwhelmed. Retail still very tight with shelf space directed by majors. Imports falling off and opening up more space. Major breweries rushing in with their domestic specialty.

Are we looking at an upside down funnel that is increasingly constricting as we leave the brewery and head to the consumer? Will the consumer’s insatiable thirst for flavor, adventure, romance, magic, keep the pull pressure up forcing channels to continue to expand and allow more variety to squeek through?